SEATTLE NEWS ARCHIVES & FEATURES
Nearly 17 percent of state home loans ‘underwater’
Jun 9, 2011, 8:49 AM | Updated: Mar 4, 2016, 5:59 am
Nearly 17 percent off all Washington State borrowers with home mortgages owe more than their home is worth, according to negative equity data released today by CoreLogic, a provider of consumer, financial and property analytics.
Of the 1,412,110 loans in Washington, 238,476 are “underwater” by an average amount of about $60,000, CoreLogic found. An additional 81,260 properties are within five percent of the underwater mark.
Nationally, 10.9 million, or 22.7 percent, of all residential properties with a mortgage were in negative equity at the end of the first quarter of 2011, down slightly from 11.1 million, or 23.1 percent, in the fourth quarter of 2010. An additional 2.4 million borrowers had less than five percent equity.
Negative equity, often referred to as “underwater” or “upside down,” can occur because of a decline in value, an increase in mortgage debt or a combination of both.
Together, negative equity and near-negative equity mortgages accounted for 27.7 percent of all residential properties with a mortgage nationwide. In the fourth quarter, these two categories stood at 27.9 percent.
“Many borrowers in negative equity are still able and willing to make their mortgage payments,” said Mark Fleming, chief economist with CoreLogic. “Those in negative equity and impacted by an income shock of some kind, such as a job loss, divorce, or death, are much more likely to be at risk of foreclosure or a short sale.”
There were wide disparities by state. New York borrowers were upside down by an average of $129,000, the highest average in the nation. It was followed by other high housing cost states: Massachusetts ($120,000), Connecticut ($111,000), Hawaii ($98,000) and California ($93,000). Ohio’s negative equity borrowers were upside down by $31,000, the lowest average in the nation, followed by Indiana ($34,000) and Minnesota ($38,000).
“The current economic indicators point to slow yet positive economic growth, which will slowly reduce the risk of borrowers experiencing income shocks,” Fleming said. “Yet the existence of negative equity for the foreseeable future will weigh on the housing market recovery by holding back sale and refinance activity.”
